MNI BRIEF: Signs German Insolvencies May Have Peaked - IWH

The number of German companies going bust may be close to its near-term peak, with August and September not expected to see a significant rise in insolvencies compared with June and July, a leading German economic think tank said Thursday.

Some 1025 partnerships and companies became insolvent last month, according to the Halle Institute for Economic Research’s IWH Insolvency Trend tracker, 44% above the level reported in July 2022 but only 2% more than seen in June. More than 9,000 job losses were reported among the top 10% of companies affected -- mostly in the trade and manufacturing sectors -- although this was roughly in line with the July average from 2016 to 2019.

German GDP will expand by 1.2% in 2024 and by 1.3% in 2025 according to the Bundesbank's June estimates, but growth is being hampered by continued high energy prices - hitting manufacturers in particular - and sluggish consumption (see MNI INTERVIEW2: Consumption, Energy Costs To Damp German Growth).